Endogenous information acquisition and disclosure of private information in a duopoly

This study examines duopolies' incentives to acquire and disclose information about their unknown private costs of production in a Cournot model under three different information disclosure regimes: full disclosure, full concealment, and strategic disclosure regimes. We decompose the value of information into three parts: the value of a firm learning its own type, the value of knowing the rival's type, and the value of disclosing its information to the rival. We show that firms are more incentivized to acquire information in the strategic disclosure regime than in the full disclosure and full concealment regimes. The direct effect of information disclosure decreases consumer surplus for a given information structure, and the indirect effect may increase consumer surplus by providing firms with stronger incentives to acquire information. Furthermore, information acquisition and disclosure always increase the total surplus. Our findings shed light on how regulatory arrangements affect firms' information environment and help evaluate the effectiveness of information disclosure regulation.